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Capital Gearing Trust – Cautiously positioned in volatile markets

In times of market turmoil, it is only natural that investors would look closer at trusts such as Capital Gearing Trust (CGT), which seeks to avoid losing shareholders’ money. As we show on page 3, it has done a great job of achieving this over more than four decades, with just two, low-single-digit “down-years” since 1982. Management view CGT as the most defensive trust in the UK market, just along the risk curve from cash (very low risk, but not completely risk-free like cash, for example a bank deposit or short-term government bills). The trust has delivered on its ambition of growing investors’ wealth in real terms (ahead of inflation), with returns to shareholders around 13 percentage points higher than UK inflation – as measured by the UK consumer price Index (CPI) – over the 10-year period to end April 2025.

The managers have a core belief that long-term returns for investors are maximised by avoiding loss in down periods; the effect of this is evident in the standout return of 273x since Peter Spiller took over responsibility for the trust in 1982 (to end February 2025). Investors can also take comfort from the trust’s discount control policy, and the fact that at the end of February 2025, ahead of Trump’s tariff announcements, CGT had 32% of its portfolio in “dry powder” – cash, treasury bills, and short-duration corporate credit (investments in bonds issued by companies that have low sensitivity to interest rates).